The discovery of human induced pluripotent stem (iPS) cells has resulted in an unprecedented opportunity to produce patient-specific differentiated cell types. Although induced-pluripotent stem cell lines from patients with lung disease are currently being produced, the major obstacle preventing the development of human lung disease models using these cells is our inability to efficiently convert pluripotent stem cell into lung cells. This proposal aims to develop efficient and reproducible protocols to produce lung epithelial progenitor cells from pluripotent stem cells. We start with the murine model system in order to capitalize on the easy handling and culture of mouse stem cells. The murine platform for differentiation will permit rapid, high throughput screening and robotic cell imaging of pulmonary differentiation from pluripotent cells. We elected to focus on the production of Nkx2.1-positive lung progenitor cells from mES cells because Nkx2.1 is the earliest known transcription factor that is expressed throughout the lung primordium. It marks an early lung progenitor population that subsequently gives rise to all the mature epithelial cell types of the adult lung. We will use two complementary strategies to produce Nkx2.1-positive cells and more committed Nkx2.1+/Sox2+ airway progenitor cells. The first strategy relies on the stepwise differentiation of pluripotent cells first into endoderm, then into anterior endoderm, and subsequently into Nkx2.1-positive lung progenitor cells and Nkx2.1+/Sox2+ airway progenitors. In the second strategy, we will rely on an unbiased high throughput chemical screen to identify novel pathways that promote lung progenitor cell differentiation. Finally, Nkx2.1 progenitors cells produced in both of the above platforms will be subjected to functional analysis by testing whether these progenitors can differentiate into bona fide airway epithelium using a novel in vivo reconstitution assay and well described air-liquid interface culture. Although these murine studies will be useful models of lung organogenesis, we have also shown that factors that promote the differentiation of mES cells also cause human iPS cells to form lung progenitors. Thus, we will exploit the efficiency of the murine system to identify factors that will allow us to make airway epithelium from lung disease specific human iPS cells. This proof of principle will set the stage to make any lung cell type from a pluripotent stem cell and allow the unprecedented ability to model patient specific human lung diseases in the laboratory.